Step 1 to Financial Security

Contributed by: Cindy Wysong, BCWM LLC, CFP®

Money. Let’s face it. Most people enjoy spending money more than they like saving money. And sometimes that’s ok. Knowing when it’s ok and when it’s not ok is one of the keys to financial security.

Although managing the financial affairs of a household typically fall under the responsibility of one person, if you are married it is important for both spouses to have a sound understanding of their financial lives. That can start with creating your own balance sheet – a one-page document that summarizes your assets and liabilities.

WHAT YOU OWN

The first step in understanding your financial security – or lack thereof – is becoming aware of what you own that could be turned into cash, if needed. Focus on the larger items first. Typical assets that quickly come to mind are cars, houses, bank accounts, or maybe even a business. Examples of more obscure assets are fine art, jewelry, or even a coin collection.

If you begin to make a list, be sure to notate who the actual owner is of the asset. For example, if you have a bank account, do you own it outright or is it shared with another individual, such as a spouse or a parent?

WHAT YOU OWE

This second step is certainly less fun! This entails making a list of the debt you have acquired and haven’t yet paid off. This could be anything from a mortgage balance, student loan or new car loan to a lingering credit card balance from your favorite store.

In addition to understanding the balance of each piece of debt, note the interest rate associated with the loan. The old adage “not all debt is bad debt” certainly rings true.

Depending on the interest rate or the reason for the debt, you might have obtained good debt. Remember, the lower the interest rate, the better! Note: Credit cards are notorious for charging absurd amounts of interest on unpaid balances…that can easily snowball into a dire situation. Pay off your credit card(s) every single month!

WHY DOES ANY OF THIS MATTER?

Routinely reviewing your current assets and liabilities can help you determine if your financial goals in life are realistic. Perhaps you have short-term goals (like, painting the house) or long-term goals (such as funding college for your child/grandchild or retirement). Knowing if your goals are realistic can be empowering and provide you peace of mind.

Now, go find those long-lost user names and passwords and get to work!

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Cindy Wysong is a Partner and Wealth Advisor at BCWM, LLC.

To contact Cindy:

Email: cindy@bcwm.com

Telephone: (913) 685-2300

www.bcwm.com